Corporate America’s Big Tax-Bonus Giveaway Is a Scam

On Wednesday afternoon, as Donald Trumpsulked over not receiving sufficient credit for his historically unpopular multi-trillion- dollar corporate tax-cut bill, the good news began to roll in. Within hours of the legislation passing Congress (without a single Democratic vote), a number of large companies announced sizable bonuses for their employees. At AT&T, more than 200,000 workers will receive $1,000 bonuses once the bill is signed into law. Comcast NBCUniversal will do the same for more than 100,000 eligible non-executive employees, according to Axios. Wells Fargo and Fifth Third Bancorp said they would be increasing their minimum wage to $15 an hour, and Wells Fargo announced it would give away $400 million to charity. The Boeing Company said in a statement that it is “still studying all of the provisions of the new legislation” but plans to spend $300 million on, among other things, charitable contributions and employee-development programs.

This is, on the one hand, a pretty nice Christmas present for a lot of people. It’s a massive P.R. win for the companies involved, and even more so for the president and the Republican Party, which have been fending off accusations that the benefits from the tax bill—which go primarily to the mega-rich and large corporations—won’t trickle down. It’s also far less than meets the eye. As The New York Times’s Binyamin Appelbaumnotes, Goldman Sachs has estimated that the G.O.P. tax bill will increase Wells Fargo’s profits by $3.7 billion next year, so $400 million to charity is “basically tithing”:

“Wells Fargo currently pays a minimum of $13.50 an hour. They had about 25,000 workers at that level last year. So raising the minimum to $15/hr costs them about $80 million a year, assuming those workers are full time.”

“Put differently: Wells Fargo just announced that it will use 2 percent of its tax-cut windfall to pay higher wages.”

It’s a similar situation across the board: Boeing has pledged $300 million after making $4.9 billion in profit last year—a number that is likely to skyrocket now that the top marginal corporate-tax rate has been slashed from 35 percent to 21 percent. AT&T has pledged $200 million worth of giveaways after $12.9 billion in profits last year. And so on.

We’ve seen this all before. After the election, companies rushed to recycle job announcements to give Trump an easy win: Carrier pledged to keep hundreds of jobs in Indiana while quietly moving many to Mexico; G.M. and Sprint both earned good press by publicizing job-creation plans that had been locked in months earlier. The C.E.O. of SoftBank, Masayoshi Son, posed with Trump to give him credit for a $50-billion investment fund that had already been created. It worked for both the president and those companies then, so why not now? The generous (one-time) bonuses that AT&T announced on Wednesday may have less to do with the tax bill than an earlier union victory: As Splinter notes, the union Communication Workers of America had been pressuring AT&T to commit to a wage increase a month ago. It doesn’t hurt that the company is really hoping Trump’s Department of Justice will allow its merger with Time Warner to go through. $200 million in bonuses isn’t a bad insurance policy, given the $500-million breakup fee that AT&T would have to pay if the merger falls through. (AT&T has disputed that the merger has anything to do with their sudden generosity.)

Wells Fargo, meanwhile, had already committed to raising its minimum wage back in . . . September. Another $1.50/hour raise, for the small number of employees who were making the old minimum of $13.50/hour, is no skin off their teeth. But if you want to understand where the bulk of Wells Fargo’s profits are going, just listen to C.E.O. Tim Sloan, who told CNN on Tuesday precisely what he hopes to do with his savings from the G.O.P. bill. “Is it our goal to increase return to our shareholders, and do we have an excess amount of capital? The answer to both is yes,” he said. “So our expectation should be that we will continue to increase our dividend and our share buybacks next year, and the year after that, and the year after that.” Maybe the bank’s lowest-paid employees should invest in the 401(k) that they probably don’t have.